David Miliband leaves the front bench

He has announced that he is leaving so as not to be a "distraction", and will continue to "support f

David Miliband has announced that he is not standing for the shadow cabinet to avoid being a "distraction" from his brother's leadership.

Justifying his decision to BBC News just now, Miliband said:

"I want to give him the freedom and the space to drive the party forward as he sees fit and support him from the backbenches. Ed needs a clean field to lead the party forward."

He also refused to rule out returning to front bench politics eventually, but said that he would always make the decision with the interests of the country and the party first. When asked whether his brother had asked him to stay, he said "that's a private discussion."

From his statement to his constituency party in South Shields:

On the day that nominations closed for the Shadow Cabinet, I think it right to explain to you and party members why I think I can best support him (Ed) from the back benches. The party needs a fresh start from its new leader, and I think that is more likely to be achieved if I make a fresh start. This has not been an easy decision, but having thought it through, and discussed it with family and friends I am absolutely confident it is the right decision for Ed, for the party, and for me and the family ...

This is now Ed's Party to lead and he needs to be able to do so as free as possible from distraction. Any new leader needs time and space to set his or her own direction, priorities and policies. I believe this will be harder if there is constant comparison with my comments and position as a member of the Shadow Cabinet. This is because of the simple fact that Ed is my brother, who has just defeated me for the Leadership. I genuinely fear perpetual, distracting and destructive attempts to find division where there is none, and splits where they don't exist, all to the detriment of the Party's cause.

You can read his full letter to his constituency party here.

Caroline Crampton is web editor of the New Statesman.

Getty
Show Hide image

Taxation without benefits: how our tax system increases inequality

We often hear the progressive income tax used as a proxy for all tax when it actually accounts for just over a quarter of the tax take.

Tax may not be the burning issue on everyone’s minds over the next month, but the Panama Papers leak has proven that the thorny issues of who pays what, and what level of tax is fair, are ones that are never too far away from the public consciousness.

One of the most important annual publications on tax is the Office for National Statistics’ Effects of Taxes and Benefits on Household Income. Published today, it shows, among other things, the proportion of income paid in tax by people at different points on the income spectrum. This may sound like the natural domain of the data nerd, but it actually tells us some rather interesting facts about our system of taxes and benefits.

First, the good news. Our much maligned welfare system is in fact a beacon of progressiveness, drastically reducing the level of income inequality we see in this country. In fact, overall, taxes and benefits are quite substantially redistributive. Without them, the income of the richest 20 per cent of households would be 14 times higher than the poorest 20 per cent. With them, that gap falls to only four times.

The benefit system as a whole decreases the Gini coefficient, the most frequently used measure of inequality, by 14 percentage points. For anyone who sees taxes and benefits as a key component in reducing economic inequality, or boosting the incomes of the poorest, or, frankly, tackling social injustice, this is rather welcome news.

But now for the bad news.

While our welfare system is undoubtedly progressive, the same cannot be said of our tax system when looked at in isolation. The poorest face a disproportionately heavy tax burden compared to the richest, paying 47 per cent of their income in tax, compared to just 34 per cent for the richest. Last year (2013/14) this difference was 45 per cent – 35 per cent, and the year before (2012/13) the gap was 43 per cent – 35 per cent. So while the proportion of income paid in tax has fallen slightly for the richest, it has increased for the poorest.

While some taxes like income tax are substantially progressive, those such as VAT and Council Tax are not. Even after adjusting for rebates and Council Tax Benefit, the poorest 10 per cent pay 7.1 per cent of their income in council tax while the richest 10 per cent pay only 1.5 per cent.

Should this matter, if our system of benefits continues to narrow the gap between rich and poor? Well, yes, not least because that system is under severe pressure from further cuts. But there are other good reasons to focus on the tax system in isolation from the benefit system.

Polling by Ipsos MORI has shown that the public believes that the tax system by itself reduces inequality, and it is often spoken of by politicians as if that is the case. We often hear the progressive income tax used as a proxy for all tax, for example, when it actually accounts for just over a quarter of the tax take.

Understanding why the tax system does not by itself reduce inequality is therefore important for both thinking about how tax revenues could be better raised, and for understanding the importance of the benefit system in narrowing the gap between the richest and the poorest.

John Hood is Acting Director of the Equality Trust